Veeco Reports Fourth Quarter 2013 Financial Results

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Feb. 19, 2014-- Veeco Instruments Inc. (Nasdaq:VECO) announced its financial results for the fourth quarter ended December 31, 2013. Veeco reports its results on a U.S. generally accepted accounting principles (“GAAP”) basis, and also provides results excluding certain items. Please refer to the attached table for details of the reconciliation between GAAP operating results and Non-GAAP operating results. All results presented herein are for Veeco’s “Continuing Operations.”

GAAP Results ($M except per share data)

Non-GAAP Results ($M except per share data)

Q4 ‘13

Q4 ‘12

Q4 ‘13

Q4 ‘12

Revenues

$73.2

$106.8

Adjusted EBITA

($26.6)

$1.2

Net loss

($22.1)

($8.6)

Net loss

($16.4)

($3.5)

Per share loss

($0.57)

($0.22)

Per share loss

($0.42)

($0.09)

“Veeco’s full year 2013 revenue was $332 million, a decline of 36% from 2012, with all of our businesses experiencing down cycles,” commented John R. Peeler, Chairman and Chief Executive Officer. “Fourth quarter revenue was $73 million, within our guidance range. Very weak gross margins and high operating expenses contributed to poor bottom line performance. A highlight for the quarter was our continued solid cash management in a challenging environment.” Fourth quarter LED & Solar revenues were $56 million, of which $50 million was MOCVD. Data Storage revenues were $17 million.

Peeler continued, “As expected, fourth quarter bookings remained weak at $85 million, down 7% sequentially. We haven’t yet seen a recovery in business conditions. MOCVD bookings decreased 22% sequentially to $52 million and have been at trough levels for over two years. MBE and Data Storage bookings improved slightly from the prior quarter, to $11 million and $22 million, respectively. And while not included in reported fourth quarter bookings, we received a purchase order from the world leader in mobile OLED displays for a next generation Fast Array Scanning Atomic Layer Deposition (FAST-ALD™) prototype system.

“While 2013 was a challenging year, we remain positive about trends in LED lighting and our new growth opportunity in flexible OLED encapsulation for mobile phones,” added Peeler. “Our R&D capability, technology leadership position, world class sales and support organization, flexible manufacturing approach and solid balance sheet provide a strong foundation for the future.”

First Quarter 2014 Guidance and Outlook

Veeco’s first quarter 2014 revenue is currently forecasted to be between $85 million and $95 million, with gross margins between 33-35% and operating spending in the range of $42-43 million.

Peeler commented, “While it is too early to call a turn in our MOCVD business, we are seeing some encouraging signs. LED fab utilization rates appear to be relatively stable and high at all key accounts and solid state lighting adoption is accelerating. We are talking to leading customers about potential capacity expansions, and our orders are likely to improve this quarter.

Our priority for 2014 is to take the steps necessary to transition the Company back to profitable growth. We are focused on four areas to improve our performance: 1) developing and launching game-changing new products that enable cost effective LED lighting, flexible OLED encapsulation and other emerging technologies; 2) executing manufacturing cost reduction initiatives and lowering expenses wherever possible; 3) driving process improvement initiatives to make us more efficient; and 4) improving product differentiation, customer value and pricing to stem margin erosion. We anticipate that Veeco will run at a loss for a couple of quarters, but see a very bright future for the long run,” concluded Peeler.

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm today. To join the call, dial 1-888-254-3571 (toll free) or 1-913-312-1504 and use passcode 7662716. The call will also be webcast live on the Veeco website at
www.veeco.com
. A replay of the call will be available beginning at 8:00pm tonight through 8:00pm ET on March 5, 2014 at 888-203-1112 or 719-457-0820, using passcode 7662716, and on the Veeco website.
We will post an accompanying slide presentation to our website prior to the beginning of the call.

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2012 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases.
Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

Three months ended

Year ended

December 31,

December 31,

2013

2012

2013

2012

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Net sales

$

73,209

$

106,849

$

331,749

$

516,020

Cost of sales

57,567

68,122

228,607

300,887

Gross profit

15,642

38,727

103,142

215,133

Operating expenses (income):

Selling, general and administrative

26,409

18,552

85,486

73,110

Research and development

20,824

22,162

81,424

95,153

Amortization

2,961

1,031

5,527

4,908

Restructuring

(286

)

1,736

1,485

3,813

Asset impairment

1,220

1,335

1,220

1,335

Total operating expenses

51,128

44,816

175,142

178,319

Other expense (income), net

(876

)

228

(1,017

)

(398

)

Changes in contingent consideration

829

-

829

-

Operating income (loss)

(35,439

)

(6,317

)

(71,812

)

37,212

Interest income (expense), net

(18

)

266

602

974

Income (loss) from continuing operations before income taxes

(35,457

)

(6,051

)

(71,210

)

38,186

Income tax provision (benefit)

(13,372

)

2,591

(28,947

)

11,657

Income (loss) from continuing operations

(22,085

)

(8,642

)

(42,263

)

26,529

Discontinued operations:

Income (loss) from discontinued operations before income taxes

-

(265

)

-

6,269

Income tax provision (benefit)

-

148

-

1,870

Income (loss) from discontinued operations

-

(413

)

-

4,399

Net income (loss)

$

(22,085

)

$

(9,055

)

$

(42,263

)

$

30,928

Income (loss) per common share:

Basic:

Continuing operations

$

(0.57

)

$

(0.22

)

$

(1.09

)

$

0.69

Discontinued operations

-

(0.01

)

-

0.11

Income (loss)

$

(0.57

)

$

(0.23

)

$

(1.09

)

$

0.80

Diluted:

Continuing operations

$

(0.57

)

$

(0.22

)

$

(1.09

)

$

0.68

Discontinued operations

-

(0.01

)

-

0.11

Income (loss)

$

(0.57

)

$

(0.23

)

$

(1.09

)

$

0.79

Weighted average shares outstanding:

Basic

38,904

38,698

38,807

38,477

Diluted

38,904

38,698

38,807

39,051

Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

December 31,

December 31,

2013

2012

(Unaudited)

(Audited)

ASSETS

Current assets:

Cash and cash equivalents

$

210,799

$

384,557

Short-term investments

281,538

192,234

Restricted cash

2,738

2,017

Accounts receivable, net

23,823

63,169

Inventories

59,726

59,807

Prepaid expenses and other current assets

35,019

42,700

Total current assets

613,643

744,484

Property, plant and equipment at cost, net

89,139

98,302

Goodwill

91,348

55,828

Deferred income taxes

397

935

Intangible assets, net

114,716

20,974

Other assets

38,726

16,781

Total assets

$

947,969

$

937,304

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

35,755

$

26,087

Accrued expenses and other current liabilities

51,243

41,541

Customer deposits and deferred revenue

34,754

42,099

Income taxes payable

6,149

2,292

Current portion of long-term debt

290

268

Total current liabilities

128,191

112,287

Deferred income taxes

28,052

7,137

Long-term debt

1,847

2,138

Other liabilities

9,649

4,530

Total liabilities

167,739

126,092

Equity

780,230

811,212

Total liabilities and equity

$

947,969

$

937,304

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to non-GAAP results

(In thousands, except per share data)

(Unaudited)

Three months ended

Year ended

December 31,

December 31,

2013

2012

2013

2012

Adjusted EBITA

Operating income (loss)

$

(35,439

)

$

(6,317

)

$

(71,812

)

$

37,212

Non-GAAP adjustments:

Amortization

2,961

1,031

5,527

4,908

Equity-based compensation

4,075

3,445

13,130

13,854

Restructuring

(286

)

1,736

1,485

3,813

Asset impairment

1,220

1,335

1,220

1,335

Changes in contingent consideration

829

-

829

-

Earnings (loss) from continuing operations before interest, income taxes

(1) The Company utilized the with and without method to determine the income tax effect of non-GAAP adjustments.

NOTE - This reconciliation is not in accordance with, or an alternative method for, accounting principles generally accepted in the United States ("GAAP"), and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITA and Non-GAAP EPS, which are the primary indicators used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes adjusted EBITA and Non-GAAP EPS report baseline performance and thus provides useful information.